weekly roundup – CBDCs | DeFi | Grayscale | Vanguard
On Friday, Bitcoin and Ethereum saw their largest respective options expiry ever, marking a major milestone for the cryptocurrency market. Analysts had been forecasting intense volatility but the markets traded cautiously over the weekend.
On Saturday, Bitcoin educator Andreas Antonopoulos suggested using DeFi for BTC passive income, saying there are risks behind any current method of earning steady income with one’s Bitcoin holdings, but DeFi offers one of the few ways to do so without “giving your money to other people.”
Here’s our weekly roundup of the industry news and big reads.
Grayscale Will Own 3.4% of All BTC by January
According to a tweet by digital asset analyst Kevin Rooke on 25th June, Grayscale Investments has added 19,879 BTC to its Bitcoin Trust in the last week, purchasing faster than the tokens can be mined. The investment firm’s total Bitcoin holding currently stands at 400,000 BTC. At this rate, Grayscale will own 3.4% of all Bitcoin in circulation by January 2021 and 10% by the next halving in 2024.
The current total number of BTC in circulation is 18.415 million. Since Bitcoin reduced by half the reward given to miners for mining a block on 11th May, Grayscale has bought 53,588 Bitcoin, an average of 1,190 Bitcoin a day.
Last month, Grayscale founder Barry Silbert confirmed the company would be increasing their rate of purchase of the digital asset.
Vanguard’s Blockchain Platform for Foreign Exchange Will Go Live in Q3 2020
Mutual fund giant Vanguard has completed another blockchain pilot that aims to change the risk profile of foreign exchange transactions. The Pennsylvania-based investment firm ran the pilot on Symbiont’s Assembly blockchain with participation from State Street, BNY Mellon and investment firm Franklin Templeton.
Vanguard and Franklin Templeton acted as dealer banks and State Street and BNY Mellon acted as counterparty banks as well as custodians, said Symbiont’s foreign exchange lead, Joe Ziccarelli.
Symbiont believes the foreign exchange platform will go into production in the third quarter of 2020, again according to Ziccarelli.
How Bitcoin May See an Unexpected Boost from a DeFi Token Bubble Burst
DeFi has become a buzzword in the digital assets space over recent weeks. Migrating financial services to a decentralised platform has been viewed by many as a killer use case for cryptocurrency, specifically Ethereum. According to data provider DeFiPulse, the cumulative value of tokens locked in DeFi applications has surged from $1 billion on 15th June to $1.65 billion on 26th June – a growth of 65% in eleven days. Simultaneously, the prices of tokens related to this cryptocurrency sector have seen rapid growth. A recent Forbes article goes on to cover how DeFi may boost bitcoin.
Kelvin Koh, a partner at cryptocurrency advisory and investment fund Spartan Group, observed on 9th June that once “smaller altcoins” reach valuations that are deemed frothy by investors, Bitcoin will experience strong capital inflows. Referencing the strength of tokens such as MKR, LEND, and their contemporaries, Koh said:
“We have seen a major re-rating in many of the smaller altcoins (esp DeFi ones) in the past 4-5 weeks while BTC has been range bound. At some point, the valuation of these alts will start to look frothy and the capital will flow back to BTC.”
Top Banks Say Gold May See a Record Rally by 2021 – Why Bitcoin Can Too
Morgan Stanley, JPMorgan and Goldman Sachs all foresee the gold price rallying by 2021. According to a research paper from Bloomberg, the precious metal’s uptrend can fuel a Bitcoin upsurge. The researchers at Bloomberg confirmed that the same forces supporting gold could positively affect Bitcoin:
“The same forces buoying gold support Bitcoin, yet the supply of the crypto is more constrained. Adoption, by default, is the primary Bitcoin metric, and our indicators remain positive.”
Crypto Research Report Predicts $397K Bitcoin Price by 2030
According to the June 2020 edition of the Crypto Research Report, researchers predict the price of BTC, ETH, LTC, BCH and XLM will surge before 2025, and may continue for at least five years.
They state: “We believe that bitcoin is still at the very start of its adoption curve. The price of $7,200 at the end of 2019 suggests that Bitcoin has penetrated less than 0.44% of its total addressable markets [worth $212 trillion]. If this penetration manages to reach 10%, its non-discounted utility price should reach nearly $400,000.”
That would mean a price increase of more than 4,000% for BTC by 2030, but ETH, LTC, and BCH are also looking bullish in this scenario, with surges of roughly 1,600%, 5,000%, and 5,400%, respectively. However, XLM would see the largest increase: more than 11,000% from $0.07 to $7.81.
The Liechtenstein-based research group analyse cryptocurrencies based on their target addressable market (TAM), a metric used “to estimate a cryptoasset’s implied future price.” According to the report, TAMs for cryptocurrencies include remittance, tax evasion, offshore accounts, store of value, online transactions, micropayments, crypto trading, gaming, online gambling, consumer loans, reserve currency, and others.
Valdis Dombrovskis, Executive Vice President of the European Commission for An Economy that Works for People (Alexandros Michailidis/Shutterstock.com)
EU Creating a Regulatory Regime for Cryptocurrencies, Says Economic Chief
The European Union is preparing a new regulatory regime that could include stricter requirements for crypto assets, including stablecoins. Valdis Dombrovskis – the European Union’s Executive Vice President of the European Commission for an Economy that Works for People – said Europe had to seize the opportunity to become one of the main rule-makers for digital finance.
“This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance,” he said during a speech at the Digital Finance Outreach 2020 earlier this week.
The increased attention from the regulators of one of the world’s principal economic blocs is a strong sign that crypto assets are being taken seriously at the highest levels.
Podcasts: Central Bank Digital Currencies – When are They Coming and What Do They Mean
In a forward looking conversation on central bank digital currencies, Coinshares’ Danny Masters and RRE Ventures’ Jim Robinson tackled the opportunities and risks inherent to CBDCs, how they will help governments more directly implement monetary policy, and the role that private industry could have in sovereign currencies in the future.
Meanwhile, Chris Brummer on the Fintech Beat podcast looks at how the Bank for International Settlements tackles CBDCs.